Selling Guide

Published December 16, 2020

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What are the requirements for a rural high-needs appraisal waiver?

Rural High-Needs Appraisal Waiver

In selected rural high-needs areas, Fannie Mae may offer appraisal waivers through DU for certain transactions. This appraisal waiver may be combined with other loan products, such as HomeReady.

The rural high-needs appraisal waiver offer will be considered for the following transactions only:

  • loan casefiles that receive an Approve/Eligible recommendation; 
  • purchase transactions;
  • one-unit principal residence properties (excluding manufactured homes);
  • borrowers with income at or below 100% of the area median income; and
  • LTV ratios up to 97% and CLTV ratios up to 105% with a Community Seconds.

The following are ineligible for the rural high-needs appraisal waiver:

  • cash-out or limited cash-out refinances;
  • second homes and investment properties; and
  • all other transactions that are ineligible for an appraisal waiver as listed above.

The following table provides the requirements related to the home inspection. These requirements must be met for the lender to exercise the rural high-needs appraisal waiver.

The lender must
  obtain a home inspection to determine the property condition. The inspection report must be retained in the loan file and made available to Fannie Mae upon request.
  review the inspection report to verify the property condition. The content of the inspection report must be sufficient for the lender to determine whether the property is safe, sound, and structurally secure. Any issues that compromise safety, soundness, or structural integrity must be repaired before loan delivery.
  obtain an affidavit signed by the borrower(s) confirming that they received a copy of the property inspection report, read the report, and were notified of any lender-required repairs.
  confirm that the purchase contract contains an inspection contingency that offers the borrower(s) enough time to cancel the contract without penalty if they so choose, should the inspection reveal an issue with the property.
  confirm that the inspector has liability insurance.
  use a professional inspector that meets the state license and education requirements for those states that regulate inspectors.

Note: In states that do not have inspector licenses, inspectors that are professionally accredited members in good standing of a nationally recognized property inspection organization must be used. The national organization must require education, testing, and adherence to a code of ethics and to standards of practice.

  represent and warrant that the property is safe, sound, and structurally secure and that the property is not in C6 condition. See A2-2-06, Representations and Warranties on Property Value and B4-1.3-06, Property Condition and Quality of Construction of the Improvements for additional information.

For additional information, see B4-1.4-10, Appraisal Waivers.

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